SCOTUS ruling tariffs illegal would be positive for equities, says Deutsche Bank's Binky Chadha

Core Insights - The potential ruling by the Supreme Court on tariffs could lead to a short-term positive impact on equities, particularly for consumer companies that have not yet recovered from pandemic-related challenges [2][10] - The current bond yields are perceived to be low, with expectations that they should be closer to 4.5% for the 10-year yield, raising concerns about government revenue from tariffs and the overall deficit [4][8] - The contribution of tariff revenue to the government budget is considered overstated, as the impact on corporate profits and subsequent tax revenues must also be taken into account [5][8] Tariffs and Market Impact - The removal of tariffs could be viewed as a tax cut, potentially benefiting the market and consumer companies significantly [6][10] - There is skepticism regarding the sustainability of tariff revenue, especially in light of the overall government spending of $7 trillion, indicating that the tariffs may not significantly affect the budget [7][8] - The discussion around tariffs has been ongoing for several months, with indications that the Supreme Court may rule them illegal, which could drastically change the market landscape [9][10] Job Market and Economic Indicators - Recent job market data indicates the largest drop in layoffs in October in 20 years, suggesting a significant slowdown in the job market [11] - Despite the negative job market indicators, some high-frequency data suggests that the economy may be moving past the worst phase and approaching slightly positive conditions [12][13] - The overall assessment of the American economy indicates a prolonged slowdown, with revisions and measurement issues complicating the understanding of the current state [12][13]